Economics, public policy, monetary policy, financial regulation, with a New Zealand perspective

A transparent central bank? Not our one.

Readers may recall that on the day of the December Monetary Policy Statement I lodged a request for analytical papers the Bank had considered in recent months on the economic impact of immigration. The background was (a) the Governor’s press conference endorsement of New Zealand immigration as “a good thing”, and (b) the explicit statement in the MPS that the Reserve Bank had changed its view of how immigration affects the short-term balance between supply and demand pressures. As they stated in the key policy judgements chapter:

Record net immigration is adding materially to demand and to labour supply. Given continued strong flows, we have revised up our projection for net immigration (see chapter 5). Based on the cycle to date, we assume the future population boost and associated increases in the labour force will translate more quickly into supply potential than we have assumed in the past.

That has important implications for monetary policy.

But there was nothing in the rest of the document, or in the answers at the press conference, to explain this quite marked change of stance. As I have pointed out, the new stance is not just different from their past view, but different from quite recent Bank published research, in which demand effects exceed supply effects in the short-term, meaning that all else equal the OCR tends to rise when net immigration does.

As I noted a couple of weeks ago, when the Bank extended my quite limited request, it had seemed at the time like a fairly simple request: show us the analysis you are using to back what represents quite an important change of view.

A short time ago, I received the Bank’s final response. The heart of the response is here (I’ve highlighted the section in bold)

The Reserve Bank holds 20 documents within the scope of your request, which are all related to either the Monetary Policy Committee or the Governing Committee’s discussions of Monetary Policy.

The Act explicitly recognises, in section 4(c), that there are times when releasing information is against the public interest and provides for such circumstances with different types of reasons to withhold information. The Reserve Bank is withholding these 20 documents under the following grounds of the Act:

s6(e)(iv) – to prevent damaging the economy of New Zealand by disclosing prematurely decisions to change or continue government economic or financial policies relating to the stability, control, and adjustment of prices of goods and services, rents, and other costs;

s9(2)(g)(i) – to maintain the effective conduct of public affairs through the free and frank expression of opinions by or between officers and employees of any department or organisation in the course of their duty;

The papers about immigration that you’re seeking were prepared in the context of monetary policy discussions, including setting the Official Cash Rate and publishing the Monetary Policy Statement. As you are aware from your time working at the Bank and from your previous requests for information related to both the Monetary Policy Committee or the Governing Committee, the Reserve Bank considers that information provided to and discussed recently by policy committees in relation to setting the Official Cash Rate must be kept confidential in order to ensure that free and frank discussion occurs and that free and frank advice is provided to the Governor. The Bank considers that the need to maintain confidentiality abates over time as the economic cycle moves along, but that current and recent advice must remain confidential in order for the Bank to effectively perform its monetary policy function. Public disclosure of current and recent advice occurs, in summary form, via publication of the Monetary Policy Statement and associated news statement. The process of deciding what to publish in the Monetary Policy Statement recognises and balances the tension between disclosure and confidentiality.

Frankly, if they had told me that they had no papers within scope I might not have been unduly surprised. Sometimes forecast assumptions are tweaked to produce the bottom line the Governor wants (always have been, probably always will be).

But to suggest that no paper on any aspect of immigration that went to the Monetary Policy Committee at any time over the five months or so leading up to the Monetary Policy Statement can see the light of day, on principle, seems completely inconsistent with the statutory purposes and principles of the Official Information Act – designed to make information more available. And there is no sign that the Bank has considered the papers one by one: it looks a lot like a blanket refusal.

As for the statutory provisions they quote:

section 6(e)(iv) simply cannot be used here. It refers to premature disclosure of decisions. My request was for background analysis or research.

and the invocation of the “free and frank” provisions is also, at best, a stretch. I didn’t ask for minutes or records of discussion at meetings. I don’t even ask for individual pieces of OCR advice (the one page notes advisers submit), but for pieces of analysis – prepared, most probably, in one or other of the sections in the Economics Department. The material clearly exists. It is official information. We should be able to see it – especially, when it has “important implications for monetary policy”.

As I’ve noted repeatedly there is a far higher degree of transparency (and timely transparency) around background papers feeding into the government’s Budget deliberations.

I noted recently that “the Reserve Bank constantly tries to convince us of how transparent it is. As Deputy Governor, Geoff Bascand, put it in his first on-the-record speech”

The Reserve Bank is deeply committed to transparency – of policy objectives, policy proposals, economic reasoning, and of our understanding of the economy, and of course of our policy actions and intent. Clear communication and strong public understanding make our policy actions more effective.

We are working to enhance the openness and effectiveness of our communications

Mine wasn’t a request for anything obscure. It didn’t have a “gotcha” agenda – though legally it doesn’t matter if it did. (And, if anything, their change of view happens to support my current view on monetary policy). It was just a request to see the background papers that appear to have led to a large change of view, on an important part of how current shocks affect the economy and inflation pressures – a change not elaborated on at all in the document they did make available, the Monetary Policy Statement. To enable us to better appreciate, in Bascand’s words, their “economic reasoning, and…our understanding of the economy”.

The Bank simply isn’t very transparent at all.

I will pass on this response to the Office of the Ombudsman.

The cause of getting some insight into the Bank’s view of immigration is not, apparently, totally hopeless. At the end of today’s email they did include this

The Bank holds other information that is not within the scope of your request but that nevertheless may help shed light on the Bank’s views about immigration. This material is currently being worked on with a view to publication and the Bank will inform you when it is available.

I’ll look forward to seeing that material when it eventually appears. But, as they note, it isn’t within the scope of my request, or within the sort of 20 working day OIA timeframe. It continues the Bank’s longstanding approach of acting as if the principles of the Official Information Act really don’t apply to them, and that as far as possible only things that the Bank has written for external publication should see the light of day, not “official information” as defined by Parliament.

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5 thoughts on “A transparent central bank? Not our one.”

“The Bank holds other information that … may help shed light on the Bank’s views about immigration. This material is currently being worked on with a view to publication”… sounds like papering up the cracks to me

He was a bad choice and demonstrates that daily with his belief that he can run this charade denying information to the very people who pay his wages.
He may be a high ranking knob but he is still a Public Servant.

I witness daily, significant numbers of students who come to NZ, can’t do courses, who fraudulently produce work that is not properly monitored and subsequently pass a high level course. As others on the admin side of the course say: “this is just a box ticking exercise”. I believe that NZ will pay dearly for a large number of unqualified (even with a piece of paper), ex students who have used a loop hole to come here and stay. I know also, that this scheme is currently being ramped up to nearly triple the numbers.